Trade unions warn Labour on public sector pay stance

LEADING BRITISH trade union leaders, who are now the Labour Party’s largest financial backers, have demanded that the party abandons its support for public sector pay freezes amid warnings that future support could be threatened if the party does not change its stance.

“You can’t stimulate the economy if the poorest people in the land are effectively being wage-freezed for three years,” said the Irish-born head of the GMB union, Paul Kenny, who leads nearly 700,000 workers, before Labour’s annual conference began in Manchester.

Union leaders are particularly angry with Labour shadow chancellor Ed Balls, who backed public pay restraint as part of Labour’s attempts to regain credibility with the voters following the blame it received for failing to prevent the 2007-2008 collapse of British banks.

“What I want to see from Ed Balls is less talking, more listening,” said Mr Kenny, who added that Mr Balls would “give an aspirin a headache”.

Putting pressure on Mr Balls to change his tone with his speech to conference in the coming days, Mr Kenny said it would mark “an important moment for trades unions”. “I think that Ed Balls’s position in relation to a number of things is frankly not tenable with the trade unions,” he added.

“You can’t talk about solving the problems in the economy by continuing to squeeze down on some of the lowest-paid workers in our society. It’s just not feasible.”

The unions’ demands for Labour to condemn the pay freeze will mark one of the key debates of the coming days in Manchester.

Labour leader Ed Miliband, who is under pressure to raise his profile with British voters, rejected the criticism from both Mr Kenny and Len McCluskey, leader of the Unite union, saying Mr McCluskey was wrong to call for a change in policy direction.

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“We’ve got the right policy to say we put jobs in the public sector ahead of pay rises. That’s what we said we would do this parliament. It is a difficult decision but it is the way to keep jobs in the public sector,” Mr Miliband told the BBC’s Andrew Marr yesterday.

Unable to raise significant sums from private industry, Labour has become dramatically more dependent on union funding since the last election, with some £16 million contributed. Increasingly, however, the unions are insisting that their influence should match their contributions.

Such a course, Mr Miliband believes, would threaten electoral disaster, leaving the party reliant on a core vote and with no hope of an overall majority in 2015. Putting down a marker yesterday, he said: “There is no future for this party as the party of one sectional interest of society.”

A confrontation with the unions, if it can be won without leaving the party penniless, has considerable value for Mr Miliband, since it would mirror Tony Blair’s success over traditionalists in the 1990s in relation to clause four, a commitment in the party’s constitution to nationalisation.